Ryan Sean Davy, 43, told officials at base camp that he had climbed alone as far as camp two -- 6,400 metres (21,000 feet) -- to acclimatise ahead of a summit push before he was caught.
Foreigners have to pay the Nepal government $11,000 for permission to climb the 8,848 metre (29,030 foot) peak -- a major earner for the impoverished country.
"I saw him alone near base camp so I approached him and he ran away," said Gyanendra Shresth, the government liason officer at base camp.
"I followed him with my friend and found him hiding in a cave nearby," he told AFP.
"He had set up camp in an isolated place to avoid government officials."
It is highly unusual for a foreign climber to attempt to scale Everest alone -- most do so with the help of at least one Sherpa guide and a large support team at base camp.
Davy could be banned from Nepal for five years or face a 10-year ban on climbing in the country.
Shresth said he had also seized Davy's passport and told him to return to Kathmandu to retrieve it.
He will also be fined $22,000 -- double the cost of the permit.
Davy could not be reached for comment, but photos on a Facebook page under his name appear to show a climber traversing the Khumbu Icefall, which lies between base camp and camp one.